While expectations were high for significant tax relief, especially among salaried employees and the middle class, Budget 2026 largely opted for continuity.
Although there were expectations that the tax-free income threshold could be extended closer to ₹15 lakh, the Budget chose incremental relief over a major expansion. The focus remains on a low-rate, low-deduction tax structure aimed at simplifying compliance.
The Budget once again reinforced the government’s preference for the new tax regime, retaining wider slabs and higher rebates.
Key features include:
Section 87A rebate of up to ₹60,000
Standard deduction of ₹75,000 for salaried taxpayers
No income tax liability for those earning up to ₹12.75 lakh under the new regime
Taxpayers following the old regime may be disappointed, as there were no major changes to popular deductions.
Key points:
Deductions under Sections 80C and 80D remain largely unchanged
No increase in home loan interest benefits
No parity in standard deduction with the new regime
The lack of significant relief signals the government’s intent to gradually move taxpayers away from the deduction-heavy system.
Capital gains taxation was closely watched, but changes were modest.
Some rationalisation and clarification introduced
No sweeping simplification across equity, debt and property
On compliance:
Minor tweaks to TDS and TCS rules to ease procedures
Persistent issues such as AIS mismatches and refund delays remain execution challenges
The Budget offered continuity rather than fresh relief for several groups.
Senior citizens and pensioners saw limited changes
Demands for higher healthcare-related deductions remain partly unmet
Women taxpayers, gig workers and digital asset earners received minimal targeted relief
Overall, Budget 2026 stays the course on income tax policy, prioritising stability and gradual reform. While it strengthens the new tax regime, many long-standing demands from the middle class and investors remain only partially addressed.